Telstra stymies broadband

The Rudd government’s $43 billion broadband plan took another blow on Friday when
Telstra
dashed hopes of an imminent deal on the project while other companies declared related industry reforms were dead.

Telstra’s competitors reacted angrily to its warning of a “significant gap" in its dealings with the government to support the national broadband network, one day after parliament postponed a vote on laws to split the company.

Analysts said the Telstra statement indicated the company felt it was under less pressure to conclude a deal after the delay to the reform bill.

Telstra confirmed that NBN Co was offering too little to justify transferring its core network to the NBN and in effect splitting Telstra into wholesale and retail operations.

“Currently there is a significant gap between Telstra and NBN Co on what each party considers to be an acceptable financial outcome and there are also a range of commercial matters that are yet to be agreed," the company said.

It also noted that it needed “a range of legislative and regulatory approvals" from the government before concluding a deal. One report said NBN Co wanted to offer $8 billion for the assets but the company wanted $12 billion.

Communications Minister
Stephen Conroy
said the “constructive discussions" with Telstra would continue and Prime Minister
Kevin Rudd
declared that the ALP’s policy was unchanged.

But SingTel Optus government and corporate affairs director Maha Krishnapillai said the statement showed that Telstra knew it had delayed the reforms and could avoid a deal.

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“Telstra has played a two-phased game: firstly to manipulate the Senate with the pretence of good-faith negotiations to kill off structural reform, and secondly to delay and kill off the NBN," he said. “This has always been their game plan – stall, frustrate and delay."

Mr Krishnapillai said he did not expect the reform bill to get through the Senate before the federal election later this year.

“I think it’s dead in the water – I just can’t see the government getting the time to put it up again," he said.

But Mr Horrut said investors would benefit from a clear outcome rather than continued uncertainty and that this could encourage the company to reach an agreement.

Mr Horrut noted that Telstra was no longer using the word “constructive" to describe the negotiations and that the new statement emphasised the need for changes to government legislation and regulation to satisfy the company’s concerns.

Although Senator Conroy has not put the reform bill to a vote, the coalition has the support of Family First senator
Steve Fielding
to veto the bill.

“The telco bill isn’t even on the critical bills list so if there are problems getting it through the Senate the government only has itself to blame," Senator Fielding said.